The Tuesday ouster of Harry Sloan as chief executive of Metro-Goldwyn-Mayer Inc. underscores the continued turmoil at the debt-ridden independent studio since it was taken over by private equity owners five years ago.
MGM, which is struggling to refinance its $3.7-billion bank loan, will be overseen by a newly created "office of the CEO," composed of production head Mary Parent, Chief Financial Officer Bedi A. Singh and Stephen F. Cooper, a restructuring expert who joins the Century City company as vice chairman.
A successful media entrepreneur who had never run a major studio, Sloan was recruited in 2005 by MGM's consortium of owners, which includes Sony Corp. of America, Comcast Corp. and lead investors Providence Equity Partners and Texas Pacific Group.
At the time, Wall Street said that the investors had overpaid billionaire Kirk Kerkorian for the 80-year-old studio, which cost them $5 billion, despite MGM's valuable film library of 4,000 titles that included the lucrative James Bond and Pink Panther movie franchises.
Since then, Sloan has failed to make MGM a viable competitor in Hollywood. The studio hasn't released a movie since "Valkyrie," starring Tom Cruise, last Christmas. In a much-ballyhooed move in late 2006, Sloan persuaded Cruise and his then-producing partner Paula Wagner to revive MGM's moribund sister studio United Artists. But that misguided move proved disastrous, with Wagner forced out after less than two years.
After two days of intense meetings, MGM's board voted Monday night to push aside Sloan -- exactly one year after the directors gave him a three-year contract extension. MGM said Sloan would be a nonexecutive chairman.
"This is an embarrassment for Harry Sloan, but it's a big black eye for the private equity guys who came marching in with big numbers and were very arrogant," media analyst Harold Vogel said. "Now they have a big loss on their hands and they don't know how to fix it."
Most industry watchers believe that MGM will not survive much longer as an independent studio and is likely to be sold to a bigger media company such as Time Warner Inc. or merged with another movie and TV studio like Lions Gate Entertainment Corp. Qualia Capital, a private investment firm headed by Amir Malin and Ken Schapiro, is actively looking at MGM, said a person with knowledge of the situation.
